German auto industry’s transformation could result in 190,000 job losses by 2035

By Bahattin Gonultas

BERLIN (AA) – Labor supply in the German auto industry is expected to fall 6.3% by 2035, according to a recent study by the research institute Prognos commissioned by the German Association of the Automotive Industry (VDA).

The fall is expected to stem from the transition to electric vehicles (EVs) and an unspecified amount of decline in demand for workers.

In the 2019-2023 period, a decline of 46,000 jobs in Germany was attributed to the transition to EVs, and if this downward trend continues, the study estimates that the number of jobs in the auto sector could decline by 190,000 by 2035 as Germany has lost its competitiveness due to high tax rates and rising energy prices.

“A competitive location with the right political framework is needed so that as much added value and employment as possible stays here and new jobs are created in Germany,” the study said.

The VDA reported on the study after automaker Volkswagen announced Monday that it plans to shut at least three factories in Germany in addition to massive layoffs, sending shockwaves through the German auto sector.

Inflationary pressures, high energy costs, slow economic growth in Europe, the rise of the far right and competition by China and Tesla plagued German carmakers, whose exports reach $302.6 billion annually, as they make up a large portion of German exports. The sector was put under severe pressure to cut costs to remain competitive while demand was low.

Meanwhile, the transition from combustion engine cars to EVs still poses a challenge for Germany’s automotive sector due to various regulations in the country and in the European Union. While investing in battery technology, the industry also has to deal with rising costs.

*Writing by Emir Yildirim in Istanbul